- Vornado may sell Chicago’s Mart and San Francisco’s 555 California St., signaling a final step in its shift to an all–New York portfolio.
- These two properties make up the remaining 10% of Vornado’s non-NYC holdings. CEO Steven Roth said they could be sold “for the right deal at the right time.”
- Strong Q2 results and several major Manhattan deals reinforce Roth’s belief that New York remains the strongest real estate market in the US.
Vornado’s Strategic Shift
According to Bisnow, on Tuesday’s earnings call, Vornado CEO Steven Roth emphasized the company’s plan to focus entirely on New York. He confirmed that the firm is open to selling 555 California St. in San Francisco and The Mart in Chicago.
“These two assets may be on the ‘for sale’ list for the right deal at the right time,” Roth said. “Nothing is sacred.”
He noted that Vornado’s portfolio is already 90% New York-based. Selling the remaining non-NYC buildings would complete the firm’s long-term strategy to focus on Manhattan.
What’s in Play
555 California St., known as the Bank of America Tower, is a 52-story skyscraper in San Francisco’s Financial District. Vornado owns 70% of the property, while The Trump Organization holds the other 30%. Major tenants include Bank of America, Kirkland & Ellis, and Goldman Sachs.
The 1.8M SF campus—which includes two adjacent buildings—had a vacancy rate of just 6.3%, far better than the city’s 29% average. The complex generated $17M in net operating income (NOI) in Q2.
Vornado bought its stake in 2007 and renovated the building in 2017. Roth called it “the single best asset in San Francisco.”
In Chicago, The Mart spans 3.7M SF across two city blocks. Vornado bought the building in 1998 from the Kennedy family as part of a $625M deal. Originally opened in 1930, the building was the world’s largest by square footage at the time.
It remains a key commercial hub with tenants like Motorola Mobility, Conagra, and Medline. The Mart was 78% leased at the end of Q2 and produced $25M in NOI, up from $16M a year earlier.
Not Their First Attempt
Vornado has explored selling these properties before. In 2020, the firm tried to raise $5B by selling 555 California and 1290 Avenue of the Americas in Manhattan but didn’t receive acceptable offers.
In 2021, Vornado also tried to buy out Trump’s 30% stake in 555 California, but the deal didn’t close.
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Manhattan Remains the Focus
The company’s recent moves align with its broader shift toward a New York-only strategy. Vornado already spun off its D.C. portfolio in 2017 and separated retail properties into Urban Edge in 2015.
Q2 results support that strategy. Net income soared to $744M, up from just $35M a year ago. This quarter included several major deals:
- A $1.6B master lease with NYU at 770 Broadway
- A $350M sale of Uniqlo’s Fifth Avenue flagship
- A 203K SF lease with Verizon at Penn 2
The Verizon lease happened after the quarter but was still a highlight on the call.
Analysts Weigh In
Piper Sandler analyst Alexander Goldfarb said 555 California could attract more buyer interest than The Mart. San Francisco’s recovery, AI industry growth, and a more pro-business mayor could make the tower more appealing.
The Mart, on the other hand, may appeal to investors comfortable with Chicago’s more complex political and development landscape.
What’s Next
Vornado’s office portfolio was 87% leased at the end of June, down slightly from 89% a year earlier. Retail occupancy fell from 77% to 68%.
Still, Roth remains bullish on Manhattan, calling it “the strongest real estate market in the country.” He also pointed to a 42% increase in Vornado’s stock price over the past 12 months—nearly double the S&P 500’s performance.
Although there’s no official sale timeline, Roth made the message clear: “We will sell for the right price. Nothing is sacred.”
